Growth drivers of mobile satellite communication services

Growth drivers of mobile satellite communication services

Deregulation
Governments throughout the world are opening up their telecommunications systems whether it be through spectrum allocations, privatization, competition or access. Governments have realized that there is a strong correlation between telecommunications services and economic growth. Therefore they have started to knock down the walls that existed within their telecommunications markets and are encouraging investment in the latest technologies so that their countries do not fall behind in communications.

Technology
Technological developments have improved the power and versatility of satellites, today they have greater capacity and lower costs. For instance, the smaller size of many of today’s satellites lowers the cost of launching satellites. At the same time recent digital technologies (TDMA - Time Division Multiple Access, CDMA - Code Division
Multiple Access) are being applied to satellite systems which a increases capacity and lowers the cost of launching a system.

Globalization
People no longer are isolated from the world. People are affected by trade like never before; Nike and Gillette are no longer just U.S. companies. Because people are traveling halfway around the world on a moment’s notice, there is a demand for communications services that allow people to stay in touch no matter where they are. People want
to be able to make a phone call and receive one -- they want one telephone number that can be used anytime, anywhere in the world. Thus, we feel the development of the global economy is a key driver of the mobile communications business.

Economic growth
Economic growth throughout the world has increased living standards which also drives demand for communications services. As individuals increase their economic stature, one of the first things they desire is a phone. This is a positive for satellite service providers. As developing economies continue to grow and enter the global economy, the demand for satellite services will increase because people will be able to afford it, and the need for mobile services will increase.


Demand for phone service
More than 3 billion of the world’s people do not have phone service. The waiting list for landline telephone service has over 50 million names with the average wait greater than 1.5 years. On average, there are slightly fewer than 12 phones lines per every 100 people in the world. This is far lower than what exists in developed countries such as Sweden (68 lines) and the U.S. (60 lines). We believe that because the wait is so long, many do
not even attempt to get service -- this could understate the actual number of people
waiting for phone services. Atthe same time, Iridium (through research by Booz Allen and Gallup) has determined that the demand from worldwide travelers for mobile satellite services will be 42 million people by the year 2002. Regardless of how youlook at the numbers, there is a significant amount of people without phone services throughout the world. Also, phone services are not developed in many countries, so travelers are unable to access a reliable phone. Satellite communications services will solve the needs of worldwide travelers and provide phone services to many areas of the world that currently do not have phone service.

Mobile communications trends
Cellular demand continues to explode throughout the world with some estimates of 500 million subscribers by the year 2002. Cellular phone bills in Third World countries are higher than the average bill in the U.S. This suggests that demand for mobile communications services continues to grow at a very fast pace and that developing
countries are willing to pay for phone services. An ubiquitous phone service offered by satellite companies will benefit from these trends in cellular communications.